Listen to any CEO discuss their company and its goals for the future and within the first few minutes you are virtually guaranteed to hear that one of the goals is to create value for the shareholders. In order to generate value, these companies rely on the standard strategies; expand the marketplace, introduce new product lines, cut business costs, absorb other companies, shutter unprofitable centers.
These are the standard go-to strategies mainly because they have worked since the start of the industrial revolution. One of the problems with the standard techniques is that as the marketplace changes from a local to a global one, customers have more and more choices and demand from the businesses they do business with.
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Perhaps the key to growing and maintaining a highly successful enterprise can be found by looking at Poker Stars, the world’s largest online poker site that has shown no sign of slowing down since its launch.
PokerStars launched on September 11, 2001, offering play money games to just a handful of players who had found out about the site by reading messages posted in online news group. The internet boom was well underway at the time and a couple of other online poker sites were already up and running. However, PokerStars decided to approach the game differently; the brand understood the allure of tournament poker and set out to make it their forte.
Why Tournament Poker?
Poker tournaments had been a part of the poker world for some time. The biggest tournament at the time was the World Series of Poker, held each summer at Binion’s. Other casinos in Las Vegas (as well as some in Reno and California) hosted the occasional tournament, but the format was not widely available.
Tournament poker’s popularity and allure were rooted in two areas. When PokerStars first launched, the only “famous” poker players were the likes of Doyle Brunson, Johnny Chan, and Amarillo Slim Preston; all tournament poker champions. The other reason was the fantasy fulfillment potential offered by tournament poker, which allows the potential for gains that are all but impossible in a regular cash games. These tournaments allowed regular players to compete and often win against the professionals, something that is impossible in any other sport.
One player that opened his account on that first day was Greg Shahade, who was known by the online name “curtains.” In a 2013 interview, Shahade, who was still a PokerStars player, said “I desperately wanted to play poker tournaments online, but most sites at that time just specialized in cash games. PokerStars was intending to put a major focus on tournament play and this really excited me. Also, I loved the avatar system, I felt like it really added a character to each player on the site, instead of just a bunch of random nicknames.”
PokerStars Players Usher in the Poker Boom
PokerStars followed through on their intention. The site soon became known worldwide as the best place to play tournament poker. In 2003, a PokerStars player named Chris Moneymaker won a seat to the World Series of Poker Main Event playing a $40 buy-in satellite tournament on the site. He went on to win the WSOP title and $2.3 million. The next year another PokerStars player, Greg Raymer, won the title.
While the back-to-back wins of PokerStars players brought the site a great deal of publicity and new players, the site’s success was not solely due to those two victories. In just a short period of time, PokerStars had become the preferred site for professional players and recreational players as well. While the site had added cash games to their offerings, they were still best known for tournaments.
In addition to small one and two table tournaments (called Sit n Gos) and multi-table events which ran around the clock, PokerStars introduced weekly and monthly events which drew huge fields and generated substantial prize pools.
So what was PokerStars’ magic formula to become the world’s largest poker site and maintain that title year after year as well as being one of the internet’s shining success stories? The answer was simple; they consistently gave the customers what they wanted. The players developed fierce brand loyalty simply because the site listened to them. Representative of the company routinely visit online poker forums and ask players for feedback, and they are notorious for having the best online support in the business.
Brand Expansion Stays True to the Core
This is not to say that PokerStars has not changed over the years in order to grow; it has. However in doing so they relied not on any of the standard tactics but by simply giving the players what they wanted.
PokerStars became known as the site that was dedicated to poker and poker players. As players requested more variants of poker, including long “dead” variants such as 5-card draw, the site complied and was soon offering more poker variants than anywhere else.
The company launched live tournaments around the world, most notably the European Poker Tour (EPT) which hosts live festivals throughout the world and in the Bahamas. The EPT is now one of the most prestigious tours in the poker world.
The company also opened live poker rooms at casino in places such as London and Macau.
All of the company’s growth has remained centered around the core product, tournament poker.
Although the website has undergone numerous upgrades, players can still play for free just as they could in 2001. Players can still enter tournaments for stakes of less than a dollar.
The key to PokerStars’ success is one that seems to be overlooked by a large number of companies; give the customers what they want. Too many companies in the quest for growth surprisingly overlook this incredibly simple concept.
While this concept may well help business owners, it can also help investors. The “consistently gives their customers what they want” screen is not commonly found in any investment software. However finding companies that do so can provide a nice long term investment return.